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The revival of the U.S. auto industry is a huge economic story and a major issue for the Presidential campaign, especially in the Midwest.
On Monday, presumptive Republican candidate Mitt Romney was in the ultimate swing state, Ohio, and spoke directly to the issue of the auto industry's revival.
"I pushed the idea of a managed bankruptcy, and finally when that was done, and help was given, the companies got back on their feet," Romney said during an interview with WEWS-TV in Cleveland, following a campaign stop at an auto parts maker. "So, I'll take a lot of credit for the fact that this industry has come back."
Come again?
Romney did advocate for managed bankruptcy in late 2008, but he also vehemently opposed the government bailouts that most experts agree made it possible. Opposing bailouts on principle is one thing and there is much to gripe about how the government handled the auto industry, most notably its treatment of Chrysler's debt holders. But for Romney to now claim credit for the industry's rebound is a very big stretch -- even for a politician with a reputation for playing both sides of an issue.
"If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye," Romney wrote in a NY Times op-ed in November 2008. "It won't go overnight, but its demise will be virtually guaranteed."
Instead of guaranteeing failure, the government bailouts -- which began under President Bush and then continued by a newly-elected President Obama -- enabled GM (GM) and Chrysler survive long enough to make it to bankruptcy reorganization. (Ford (F) did not receive direct government assistance but it benefited from the bailouts too because they helped preserve the industry's supply chain.)
You can never prove a counter-factual but most experts, including the federal judge who presided over Chrysler's bankruptcy, agree the automakers would not have been able to get the private capital necessary to keep operating while going through bankruptcy. The credit markets were simply not functioning in late 2008, private capital was in rapid retreat and government assistance was the only viable alternative to a disorderly collapse of the U.S auto industry.
How this plays with voters remains to be seen and it's a long way from November. But when it comes to this issue, at least, Mitt Romney seems to want to have it both ways: to maintain opposition to the bailouts but take credit for the bankruptcy process the government rescue helped made possible.
Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com
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